40,000 square meters of new retail area to be completed in Tallinn in 2016
Approximately 40,000 square meters of new retail area is to be completed in the shopping centers of Tallinn during 2016, and most of it will be located in the less-saturated boroughs of Lasnamäe, Mustamäe and North-Tallinn, an overview compiled by the Uus Maa real estate company says.
The Mustamäe Center entertainment and shopping center will start vigorously taking away market share from other shopping centers in area, analyst Igor Habal said.
In the eastern borough of Lasnamäe, a new center called Kärberi Center will open in 2016, along with a Selver in Tähesaju City. In North-Tallinn, phase one of Arsenal Center will be completed, which in addition to 10,000 square meters of commercial space will offer 5,000 square meters of office space.
Since 2016 will also see the launch or continuation of several large-scale developments, such as Porto Franco and the Peterburi Road shopping center of Pro Kapital, and more clarity is expected when it comes to plans for Tallink City and Gate Tallinn, a couple of hundred thousand square meters of new commercial area is to be added in the coming few years.
"The arrival of new centers on the market would mean first and foremost a redivision of existing market and someone inevitably losing out," Habal said.
It is characteristic of the new shopping malls that they seek to establish themselves as the leisure centers of their respective area. This is causing difficulties for the older centers with a stagnant business concept, whose owners must make investments to remain competitive.
The rental for smaller spaces in the more popular shopping malls of Tallinn may reach 55–65 euros per square meter this year, the peak being from 80–100 euros per square meter.
"Rentals in the shopping centers are nearing the level of the Nordic countries, although the sales that stores generate per square meter are significantly smaller," Habal said. Even though operating costs in the Nordic countries are higher, such as 6.4 euros per square meter in Finland compared with 3.5–5 euros per square meter in Estonia, tenants of shoping centers still get 2–3 times less in sales here than in the Nordic countries.